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Credit contracts: Hire purchase, loans and other credit

High cost consumer credit contracts

What is a high cost consumer credit contract?

Credit Contracts and Consumer Finance Act 2003 ss 45C

A high cost consumer credit contract is a contract that has an interest rate of 50% or more – whether that is made up of an annual interest rate or other fees (including default interest). Some personal loan finance companies offer loans with extremely high interest rates and high fees and charges. They may focus on how many dollars a week the repayments are and not focus on the total you will pay back over time.

What interest and fees are allowed to be charged?

Credit Contracts and Consumer Finance Act 2003 s45E, 45H, 45I, 45J

The government has brought in new rules to protect consumers from the harm caused by running up excessive debt from not being able to pay high interest loans. The total cost of borrowing (which includes credit fees, default fees, interest charges and any other fees or charges passed on by the creditor) can’t be more than the first loan advance. For example, if you borrow $500 from a high cost lender, you should not have to pay back more than $1000 in total.

The lender also can’t charge you compound interest. Normal interest is based on the loan amount, and compound interest is based on the loan amount and the interest that is charged in every period (interest on interest).

The maximum rate of interest that can be charged is no more that 0.8% per day.

Default fees for missed or late payments must be $30 or less, unless the lender can prove that a higher fee is not unreasonable.

Can I enter into more than one high cost contract?

Credit Contracts and Consumer Finance Act 2003 S45G

If you were still paying off a high cost credit contract within the last 15 days, you can’t sign up to another one.

If you have already entered into two high cost contracts in the last 90 days, you can’t sign up to another one.

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Credit and debt

Where to go for more support

Community Law

www.communitylaw.org.nz

Your local Community Law Centre can provide free initial legal advice and information.

Consumer Protection

www.consumerprotection.govt.nz

Consumer Protection helpline: 0508 426 678 (0508 4 CONSUMER)

Email: cpinfo@mbie.govt.nz

The Consumer Protection website has useful information on a range of consumer topics. Consumer Protection is part of the Ministry of Business, Innovation and Employment (MBIE).

MoneyTalks

www.moneytalks.co.nz

Phone: 0800 345 123

Email: help@moneytalks.co.nz

MoneyTalks provides free, confidential budgeting support. They can pair you with a financial mentor to help you if you are struggling with debt or need advice on budgeting.

FinCap

www.fincap.org.nz

Phone: 0800 345 123

Email: kiaora@fincap.org.nz

FinCap can help you with budgeting information online or on the phone. They may also suggest a local budgeting service to help you with debt and other budgeting issues.

Consumer NZ

www.consumer.org.nz

Phone: 0800 266 786

Email: info@consumer.org.nz

The Consumer NZ website provides a wide range of information on consumer credit and debt issues, including debt collectors, repossession and bankruptcy

Commerce Commission

www.comcom.govt.nz

Phone: 0800 943 600
Email: contact@comcom.govt.nz
The Commerce Commission enforces the consumer credit legislation (the Credit Contracts and Consumer Finance Act) and the laws against misleading and deceptive conduct by traders (the Fair Trading Act). The Commission provides information on these areas on its website.

It’s All Good

www.comcom.govt.nz/business/resources-for-consumer-organisations/its-all-good

It’s All Good is an animated series produced by The Commerce Commission about consumer rights.

Citizens Advice

www.cab.org.nz

Phone: 0800 FOR CAB (0800 367 222)
Citizens Advice Bureaux have volunteers trained in consumer law who can provide information and advice if you have a problem with credit and debt issues.

Dispute resolution schemes

There are four dispute resolution schemes for consumers dealing with lenders and other credit providers.

  • Financial Services Complaints Limited – www.fscl.org.nz
    Phone:
    0800 347 257
  • Email: info@fscl.org.nz
  • Insurance & Financial Services Ombudsman –
    Phone: 0800 888 202
  • Email: info@ifso.nz
  • Banking Ombudsman – www.bankomb.org.nz
    Phone:
    0800 805 950
  • Email: help@bankomb.org.nz
  • Financial Dispute Resolution – www.fdrs.org.nz Phone: 0508 337 337
  • Email: enquiries@fdrs.org.nz

Cases in the District Courts

The Ministry of Justice

The Ministry of Justice website has information about civil claims in the District Courts: see www.justice.govt.nz and search “Claims you can take to civil court”.

Credit reporting

Privacy Commission

www.privacy.org.nz
Phone:
0800 803 909

The Privacy Commission has information on your rights in relation to credit reporting and how to complain if you feel your rights have been breached.

Your credit record

Three credit reporting companies operate nationally in New Zealand. To check your record or correct any information, you’ll need to contact them all.

You’re entitled to a free copy of your credit record. You should make sure you choose the free option when you contact each company.

Centrix – www.centrix.co.nz 0800 236 874

Illion – www.illion.co.nz 0800 733 707

Equifax – www.equifax.co.nz 0800 698 332

Personal Properties Securities Register (PPSR)

www.ppsr.companiesoffice.govt.nz

Search the PPSR register to see if there is any security interest registered against a vehicle. This can be done for a small fee by registering to check online.

Bankruptcy and other options

Insolvency and Trustee Service

www.insolvency.govt.nz

Phone: 0508 INSOLVENCY (0508 467 658)

The Insolvency and Trustee Service (ITS) deals with bankruptcies, no-asset procedures, summary instalment orders and some company liquidations. Information about those processes is available on its website. The ITS is part of the Ministry of Business, Innovation and Employment (MBIE).

Also available as a book

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